The Australian Bureau of Statistics acknowledges the cooperation and assistance received from the Australian business community in the development of these important economic indicators, the Producer Price Indexes for the output of the retail trade industry.

PREFACE

This information paper presents the concepts, data sources and methods used by the Australian Bureau of Statistics (ABS) to compile Producer Price Indexes (PPIs) for the output of the retail trade industry.

The ABS PPIs measure the change in the prices of goods and services as they leave the place of production and enter the production process. The distribution service provided by retailers is the output of the retail trade industry and is within scope of the PPIs. The distribution service is defined as “the difference between the actual or imputed price realised on a good purchased for resale and the price that would have to be paid by the distributor to replace the good at the time it is sold or otherwise disposed of." (Endnote 1).

Recent reviews of the ABS PPIs, including the 2012 PPI Review, as described in The Outcome of the Review of the Producer and International Trade Price Indexes, 2012 (cat. no. 6427.0.55.004), highlighted under-coverage of the current suite of Australian PPIs. The reviews identified that the coverage of goods is broader than the coverage of services. This coverage imbalance is primarily due to the difficulty in measuring price change in services.

The ABS has implemented strategies to address this under-coverage by expanding services price measurement. User consultation over recent years, and during the PPI Review 2012, identified the measurement of price change for the output of the retail trade industry as a high priority.

Unlike goods and many services, the price of a retailer’s distribution service is not directly observable. For some time National Statistical Organisations (NSOs) worldwide have attempted to measure this retail service though progress has been constrained by the complexity of this topic. The ABS, building upon earlier work in this area, (Endnote 2) has now sufficiently resolved methodological and data issues to be able to produce robust PPIs for the output of the retail trade industry.

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